Landlords must comply with new energy standards to avoid financial penalties

Landlords must comply with new energy standards to avoid financial penalties

18th January 2018

Inteb MS is urging landlords to comply with new legal standards for minimum energy efficiency in commercial and residential privately-rented properties as Minimum Energy Efficiency Standards (MEES) will come into force in England and Wales from April this year.

From this date it will be unlawful to grant new leases, or renew tenant leases, of residential or commercial property with an Energy Performance Certificate (EPC) rating of less than E unless registered as an exemption.

In practice, this will mean that landlords renting any property from April with an EPC rating of F or G will need to carry out works to improve the energy performance rating to E or above. Failure to do so can result in a hefty fine as local authorities will be able to impose civil penalties for non-compliance based on the property’s rateable value.

The penalty for renting out a property for a period of fewer than three months in breach of MEES regulations will be equivalent to 10 per cent of the property’s rateable value, subject to a minimum penalty of £5,000 and a maximum of £50,000. After three months, the penalty rises to 20 per cent of the rateable value, with a minimum penalty of £10,000 and a maximum of £150,000.

Crucially, landlords can also be further hit financially if they do not meet MEES regulations due to a loss of income while they are unable to legally let their property. Solicitors acting for both landlords and tenants will not be able to complete property transactions on F or G rated properties.

It is currently estimated that 18 per cent of commercial properties hold the lowest EPC ratings of F or G.

Urging landlords to take action now in order to minimise any risk, Raja Khan, commercial director at Inteb Managed Services, said: “A huge number of properties in England and Wales could be taken off the lettings market because they fail to meet these new minimum energy performance standards.

“Many landlords may not even know their property’s energy rating, despite needing an EPC by law, so it is vital they take immediate steps to avoid non-compliance and the possibility of not being able to grant new leases or renew existing ones.

He added: “It is important that landlords who are not sure whether this affects them or not - and therefore don’t have a strategy in place - get immediate professional advice.”

Inteb Managed Services, as a specialist energy services provider, has helped many of its landlord/managing agent clients prepare for MEES. If you need any information or need assistance, please get in touch with Suzanne Roberts on 079830 20402 or email suzanne.roberts@intebms.co.uk to discuss your organisation’s needs.

Other key dates:

April 2020: MEES will be extended to apply to ALL residential lettings, both new AND existing.

April 2023: MEES will apply to ALL existing commercial leases. All PRS properties will need to meet the minimum standard or be register as an exemption.

2025: Properties will need to be brought up to an energy efficiency of D or above.

2030: Minimum target of all rental properties to be at least a C energy efficiency rating.